Attempt to designate IRA benefits to pass pursuant to terms of will is invalid.
In 2006 Leonard George Smith created two IRAs, designating his children as beneficiaries. In November 2007 Smith executed a last will and testament, leaving the residue of his estate in various percentages to his children. Smith also executed new beneficiary designation forms for the IRAs. In the space provided for listing the beneficiaries of the IRAs, Smith wrote “[t]o be distributed pursuant to my Last Will and Testament.” In December 2007, Smith married Suzanne Furr. Smith died in February 2008.
Suzanne sued in the North Carolina Superior Court for Brunswick County, claiming that the beneficiary designation forms were invalid and that she was entitled to the IRAs.
The trial court granted Suzanne’s motion for summary judgment and the children appealed to the North Carolina Court of Appeals.
On appeal, the North Carolina Court of Appeals, applying New York law, affirmed the trial court and ruled in Suzanne’s favor on the grounds that: (1) Smith had not fill out the forms correctly by failing to designate a person or entity as beneficiary; (2) Smith checked the box on the form revoking all of his prior beneficiary designations; (3) the form provided that if no valid beneficiary designation is on file with the custodian, the IRA assets are to be distributed to the decedent’s surviving spouse; (4) exact compliance with the terms of the IRA agreements was required unless waived by the custodian, and there was no evidence the custodian agreed to or accepted Smith’s change of beneficiary forms or otherwise waived strict compliance with the terms of the change of beneficiary forms; and (5) the children’s attempt to invoke the doctrine of dependent relative revocation fails because New York courts do not apply the doctrine outside of wills.
